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JPMorgan Starts Testing Blockchain Technology For Dollar Transfers

As part of its effort to boost spending to tackle emerging threats from Silicon Valley, J.P. Morgan Chase & Co. has begun “quietly” testing blockchain technology on U.S. dollar transfers between London and Tokyo, The Wall Street Journal reported.

Daniel Pinto, head of J.P. Morgan’s corporate and investment bank, told the Journal that the bank has been testing the program in recent months to move U.S. dollars for about 2,200 clients between the two financial centers using a version of the blockchain technology.

“The bank wants to see whether the blockchain technology can be repurposed for currency clearing and settlement to give clients faster turnaround times and reduce the bank’s risk”, the report said, adding that the bank may start using blockchain for live transactions later this year.

The bank’s involvement in blockchain technology is not that new. Earlier this month, reports suggested that it collaborated with blockchain startup Digital Asset Holdings to explore various applications for the technology. In addition, the bank has also invested in the startup’s latest funding round. J.P. Morgan is also a member of the R3 blockchain consortium.

Leading financial institutions world over are confronted with rising threats from online lenders and payment systems, including some that use blockchain or bitcoin. The Journal said that technology seems to be the exception where J.P. Morgan is increasing spending, as the bank is cutting costs, reducing manpower and shrinking assets to adjust to an environment of leaner profit margins and stricter regulation.

Matt Zames, the bank’s chief operating officer, told the WSJ that the bank plans to increase its overall technology spending to about $9.4 billion this year from approximately $9.2 billion in 2015, while allocating nearly 40% of that budget to new investments and technologies, up from 30% at present.

Sanoke Viswanathan, chief administrative officer at J.P. Morgan’s corporate and investment bank, said that in the new blockchain plan, the bank aims to expand its testing to real trades as soon as the third quarter for certain corporate and investment bank clients including some hedge funds. However, this requires regulatory approvals and could take months.

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